RECESSION ANGST

Times are getting so tough in the Washington area that even Nordstrom is facing the music: The upscale department store is laying off some of its celebrated piano players.

Four tuxedo-clad ivory-strokers, once a symbol of elegance on Nordstrom Inc.'s sales floors, received word last week that they are the latest additions to the area's unemployment rolls. From now on, Nordstrom customers will be serenaded only during peak shopping hours.

"It's a kick in the pants," said Arthur Lieb, who played at both of Nordstrom's Northern Virginia stores for 18 months. "To me, it's a sign of recession."

The metropolitan area may not exactly be in a recession, but it sure feels that way. Anyone who hasn't yet lost a job, filed for bankruptcy, experienced a drop in income or failed to sell a house probably knows someone who has -- and wonders where the ax will fall next.

Call it Recession Angst. In less than six months, confidence in the prosperity of this region appears to have dissipated markedly, according to business executives, workers and economic experts interviewed in the past two weeks.

"It's replaced schools as the dominant topic of social conversation," said Jerry Wiener, chairman of the department of psychiatry at George Washington University. "There certainly will be an increase in stress, apprehension and anxiety."

This anxiety is pervasive, but not universal. Some business owners report their sales are continuing to grow while others argue that the Washington economy remains strong.

But in matters economic, perceptions count. If just some people are worried about the economy, their behavior can actually cause further deterioration.

Consumers worried about their jobs postpone all-but-essential purchases -- cars, for example. "We in the automotive industry are experiencing a retail slowdown," said John J. Pohanka of Pohanka Automotive Group, which has seven dealerships selling 10 makes of cars in the area. "I've got over $20 million in cars inventoried in my dealerships at the moment."

Lenders and investors become more tightfisted. "If you are a small- to medium-sized company and you hit a bump in the road, you might see your banker react differently than he would have a year ago," said one such local banker who asked not to be identified.

The result of this economic paranoia: People who in better times would have found jobs do not, clerks in stores where salaries would have been spent get laid off and businesses looking for capital can't find any.

"I think a lot of it is psychological. People are afraid for their funds," said Frank H. Rich, who ran his family's 118-year-old shoe store chain until it closed three years ago during the development boom. "Look at Garfinckel's and the layoffs, the cost of {deployment in} the Middle East, the {proposed} cutbacks at the Smithsonian. All those things cumulatively work at people's psyches."

Rich, now a special assistant to the D.C. deputy mayor for economic development, said he remains optimistic that the local economy will bounce back. And in fact, the mood is worse than the statistics. At 3.2 percent for July, the local unemployment rate remains among the lowest among major metropolitan areas.

Perhaps what has been so unsettling is how rapid the deterioration has been. The unemployment rate is nearly a full point higher than it was at its lowest point last December. It is only since the first of the year that the area has been buffeted by layoffs, bankruptcies and financial troubles among some of its once-richest individuals and institutions.

In a city that once prided itself on being recession-proof and where civil service rules made firings unusual, the nearly daily reports of new layoffs seem unthinkable to many. Last week, a systems manager at DataAmerica Corp. of Fairfax watched nervously as several of his colleagues received pink slips on their way out the door for the Labor Day weekend.

"They were laying people off, and I {thought}, 'I don't believe they're doing it, I don't believe they're doing it,' " he said. "And suddenly it was happening to me."

Stock market investors have quickly sensed the new climate. Prices for shares in Washington-area companies fell 12 percent from June 1989 to June 1990, a performance worse than all but two cities of the 40 recently surveyed by Money magazine. Of the 20 largest public companies in this area, only one, Danaher Corp., registered an increase in share price from Jan. 1 through July 30.

Other consumer reactions to the slowdown range from the gastronomic to the geographic. Cookie sales are flat at the Mrs. Fields's outlets in the area even though sales are rising nationwide. And area residents are booking fewer luxury cruises. "We are feeling the pinch," said Gloria Bohan, president and owner of Omega World Travel.

Irwin Stein, who heads a company that prints business cards, letterhead stationery and envelopes, said sales for all three have fallen by about 25 percent in just the last two months.

"I've been here for 50 years in the Washington area and this is the largest drop-off I've ever seen," Stein said.

During the national recessions of 1974 and 1982, job growth and business expansion slowed here. High interest rates virtually paralyzed the real estate market in 1980 and 1981. Further back, the riots of 1968 closed downtown businesses and sent job growth to the suburbs. The area endured wage and price controls in the early 1970s, and inflation and strikes just after World War II.

"I can't say this enough: Our memories are so terrible," said Thomas V. DiBacco, an American University professor of history who has written on the local economy. "What we are experiencing is annoyance, not hard times. We have such high expectations in the Washington area, we've had such prosperity."

Those high expectations, in a sense, were part of the problem. They caused developers to build too many office buildings, retailers to add too many stores, banks to make too many risky loans. While past downturns stemmed principally from such national causes as high interest rates or a sharp run-up in energy prices, this slump is more home-grown.

The climate is reflected in workers' attitudes. One remodeling contractor said carpenters not only can be hired for $5 an hour less than they could six months ago, they work harder because they are more afraid of being laid off.

Leila Kight saw the new employment anxiety when she recently advertised to fill two vacancies at the company she heads, Washington Researchers Publishing. When she filled the same openings two years ago, there were about 50 applicants for a job in marketing and only a handful for a junior professional/clerical position. Most of the resumes were "far from acceptable," Kight said.

This time around, 150 people applied for the marketing job and 50 for the junior-level position, and they were "the cream of the crop," she said.

"I had a man who had made $80,000 a year, then started his own business and it didn't work out. He was willing to work for $36,000," Kight said. "Everyone I interviewed said, 'It is so tough out there.' A number of people had been laid off. One woman had been laid off twice."